Regression Discontinuity with Errors in the Running Variable: Effect on Truthful Margin

Abstract

Abstract In regression discontinuity (RD) with a running variable S crossing a known cutoff c, an unexpectedly small break magnitude is due to S being a mis-measured version of the genuine running variable G. Has all been lost, and is RD useless when G≠S? This paper proves three things. First, when P(G=S)=0, nonparametric RD identification fails. Second, when P(G=S)>0, although the usual RD effect on the margin E(·|G=c) is not nonparametrically identified, the “effect on the truthful margin” E(·|G=S=c) is. Third, under a no-selection-problem assumption, the effect on the truthful margin becomes the effect on the margin; the no-selection-problem assumption is unnecessary, as long as the effect on the truthful margin is taken as a parameter of interest.